Author Question: List and define each of the five elements of internal control.[br][br][b][color=#151B54]Question ... (Read 169 times)

savannahhooper · **on:** Jul 5, 2018

List and define each of the five elements of internal control.

Question 2

On January 1, 2011, Ace Electronics borrowed 40,000 on a five-year, 7 note. The loan will be repaid in 5 equal installments of 9,756 each year, beginning on December 31, 2011.

On its statement of cash flows for the year ended December 31, 2011, Ace will show cash paid for interest as ________ activity.
A) (9,756), an operating
B) (2,800), a financing
C) (9,756), a financing
D) (2,800), an operating

adammoses97 · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

(1) Control Environment. The control environment is the overall attitude ofmanagement and employees about the importance of internal controls.
(2) Risk assessment. Risk assessment is the identification of risks faced by anorganization so that management can take necessary actions to controlthem.
(3) Control Procedures. The control procedures are the policies and proceduresdesigned to provide reasonable assurance that the business goals are metand fraud is prevented.
(4) Monitoring. Monitoring locates deficiencies in the internal control systemand improves control effectiveness.
(5) Information and Communication. Information and communication tomanagement about the control environment, risk assessment, controlprocedures, and monitoring elements of internal control are needed bymanagement to guide operations and ensure compliance with reporting, legal,and regulatory requirements.

Answer to Question 2

D